Suchergebnisse

Governments' desire to ameliorate environmental problems may conflict with other goals. Policy levels which balance different objectives can be altered by policy changes in other countries. A decrease in the importance of the pollution problem, or an increase in its global extent, increase the likelihood that tighter environmental regulations in one region induce laxer policies elsewhere. The transboundary character and the importance of environmental externalities also affect the amount of cooperation needed to improve members' welfare in a coalition. More global pollution problems require a larger coalition. However, the critical coalition size may be larger or smaller for more severe problems.

We compare the instantaneous and the long run effects of environmental reform in closed and open economies. Harmonization upward (decreasing distortions where they are most severe) or harmonization downward (increasing distortions where they are less severe), both tend to increase instantaneous world welfare. Environmental reform in a country with less severe distortions works against harmonization and may decrease welfare. Harmonization upward has more beneficial long-run effects than harmonization downward, and also provides higher expected instantaneous benefits if the current stock is uncertain. In the short run there is a conflict between environmental protection and reduction of unemployment, but in the long run the two goals are consistent.